Page 156 - 2018 White Paper on the Business Environment in China
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8 White Paper on the Business Environment in China
devices already have a market presence and pose as new or less well-known brands if the product suits their
competitors there (Gross). needs. Looking to the future purchases, 88 percent of
the consumers said they would pay more attention to
In December 2016, CFDA published “Guidelines for environmental protection and energy efficiency. Over
the Preparation of Special Reports on the Application of 60 percent agree with the importance to smart home
Innovative Medical Devices”in order to encourage medical functions and would pay an average premium of 11 percent
device study and innovation and promote the practice of more to buy such products (China Kitchen Electrical).
new medical device technology (Li, China’s Medical). Even
with additional clarity, the Chinese regulatory process The frequency of purchases is expected to climb amid
can take up to 14 months to complete. Manufacturers a plethora of product diversity and upgrades. The sale of
importing Class II devices, and both domestic and small appliances is expected to reach 460.8 billion yuan in
multinational companies with Class III devices, soon will 2020, driven by an annual growth of 12 percent that began
be able to request a priority review if certain conditions in 2016. Currently, induction, pressure, and rice cookers all
are met. Devices enrolled in the National Science and have a high level of popularity in China. Zeng Chan, an
Technology Major Project or National Key Research and analyst from Guotai Junan, claims that the demand for
Development Plan can apply for priority review, as the product upgrades of these older, small appliances is high
devices can be designed to offer “significant advantages because their quality and price are much lower than those
in clinical practice.”The policy highlights devices that treat in other developed countries. New small appliances such
rare disease, malignant tumors, and common diseases as water purifiers, electric toothbrushes, dust collectors
affecting both elderly and pediatric patients that have few and intelligent bidets are becoming popular in China
or no alternative treatments. Devices that address “urgent and are expected to be another driver for the industry
clinical need” could also receive expedited review by the (Zeng). Specialist retailers remain the top distributors for
CFDA. Decisions on priority applications will be made consumer appliances in terms of volume, but Internet
by the CFDA’s Center for Medical Device Evaluation, and retailing is growing at a faster pace (Consumer Appliances
manufacturers of prioritized devices will be eligible to in China).
receive additional interactions with Center for Medical
Device Evaluation (CMDE) (Hodsden). Jin Xing, an analyst for Citic Securities, sees a potential
for continued growth in the market, but it will only
Household Electrical Appliances materialize over the long term. “Given the low unit prices
and substitution effect amongst different products,
The continual urbanization of China, the real estate small appliances tend to grow more slowly over a longer
market, and the continual rise of smart home appliances horizon as compared to major appliances,” Jin writes in
will drive the market for kitchen appliances for the next his company report. “Rather than casting the net wide
several years as most analysts expect a robust expansion. across the sub-sector, we prefer leading names which
The urbanization rate stood at 56.1 percent in 2015 have omnichannel management capabilities and are
and is expected to go up by one percent annually for well-positioned for constant product line extensions.” Jin
the foreseeable future. According to Hong Kong Trade predicts the kitchen appliance segment may continue
Development Council (HKTDC), 88 percent of consumers to outperform the broader appliance sector, “Over the
are choosing medium or better grades of products. Built- longer term, we see potential for kitchen appliance
in stoves, stoves with tempered glass panels, and twin manufacturers to double their revenue as they upgrade
stoves are driving the major appliance market growth. The their products amid rising market concentration. In the
same study claims that half of the buyers in the market near term, incremental demand for kitchen appliances
prefer user-friendly products and roughly one third want may exceed that for white goods, as home buyers during
minimalistic designs with multiple functions. About 34 the earlier property sales boom start to purchase kitchen
percent of consumers for small kitchen appliances are appliances.”Another analyst at Citic Securities, Wei He, said
replacing existing broken products and 28 percent believe kitchen appliances were booming much like white goods
their quality of life will improve with the purchase. Nearly did from 2009-2013. “We expect it to maintain an annual
90 percent of those surveyed believe Hong Kong products growth rate of about 8 percent. Like other home appliance
belong in the middle range or higher. This percentage markets, this boom should result in the strong becoming
rises to 97 percent in first tier cities such as Guangzhou, stronger.” Kitchen appliances including small and built-
Beijing, and Shanghai. Over 82 percent are willing to buy in appliances have replaced white goods to become the
156
devices already have a market presence and pose as new or less well-known brands if the product suits their
competitors there (Gross). needs. Looking to the future purchases, 88 percent of
the consumers said they would pay more attention to
In December 2016, CFDA published “Guidelines for environmental protection and energy efficiency. Over
the Preparation of Special Reports on the Application of 60 percent agree with the importance to smart home
Innovative Medical Devices”in order to encourage medical functions and would pay an average premium of 11 percent
device study and innovation and promote the practice of more to buy such products (China Kitchen Electrical).
new medical device technology (Li, China’s Medical). Even
with additional clarity, the Chinese regulatory process The frequency of purchases is expected to climb amid
can take up to 14 months to complete. Manufacturers a plethora of product diversity and upgrades. The sale of
importing Class II devices, and both domestic and small appliances is expected to reach 460.8 billion yuan in
multinational companies with Class III devices, soon will 2020, driven by an annual growth of 12 percent that began
be able to request a priority review if certain conditions in 2016. Currently, induction, pressure, and rice cookers all
are met. Devices enrolled in the National Science and have a high level of popularity in China. Zeng Chan, an
Technology Major Project or National Key Research and analyst from Guotai Junan, claims that the demand for
Development Plan can apply for priority review, as the product upgrades of these older, small appliances is high
devices can be designed to offer “significant advantages because their quality and price are much lower than those
in clinical practice.”The policy highlights devices that treat in other developed countries. New small appliances such
rare disease, malignant tumors, and common diseases as water purifiers, electric toothbrushes, dust collectors
affecting both elderly and pediatric patients that have few and intelligent bidets are becoming popular in China
or no alternative treatments. Devices that address “urgent and are expected to be another driver for the industry
clinical need” could also receive expedited review by the (Zeng). Specialist retailers remain the top distributors for
CFDA. Decisions on priority applications will be made consumer appliances in terms of volume, but Internet
by the CFDA’s Center for Medical Device Evaluation, and retailing is growing at a faster pace (Consumer Appliances
manufacturers of prioritized devices will be eligible to in China).
receive additional interactions with Center for Medical
Device Evaluation (CMDE) (Hodsden). Jin Xing, an analyst for Citic Securities, sees a potential
for continued growth in the market, but it will only
Household Electrical Appliances materialize over the long term. “Given the low unit prices
and substitution effect amongst different products,
The continual urbanization of China, the real estate small appliances tend to grow more slowly over a longer
market, and the continual rise of smart home appliances horizon as compared to major appliances,” Jin writes in
will drive the market for kitchen appliances for the next his company report. “Rather than casting the net wide
several years as most analysts expect a robust expansion. across the sub-sector, we prefer leading names which
The urbanization rate stood at 56.1 percent in 2015 have omnichannel management capabilities and are
and is expected to go up by one percent annually for well-positioned for constant product line extensions.” Jin
the foreseeable future. According to Hong Kong Trade predicts the kitchen appliance segment may continue
Development Council (HKTDC), 88 percent of consumers to outperform the broader appliance sector, “Over the
are choosing medium or better grades of products. Built- longer term, we see potential for kitchen appliance
in stoves, stoves with tempered glass panels, and twin manufacturers to double their revenue as they upgrade
stoves are driving the major appliance market growth. The their products amid rising market concentration. In the
same study claims that half of the buyers in the market near term, incremental demand for kitchen appliances
prefer user-friendly products and roughly one third want may exceed that for white goods, as home buyers during
minimalistic designs with multiple functions. About 34 the earlier property sales boom start to purchase kitchen
percent of consumers for small kitchen appliances are appliances.”Another analyst at Citic Securities, Wei He, said
replacing existing broken products and 28 percent believe kitchen appliances were booming much like white goods
their quality of life will improve with the purchase. Nearly did from 2009-2013. “We expect it to maintain an annual
90 percent of those surveyed believe Hong Kong products growth rate of about 8 percent. Like other home appliance
belong in the middle range or higher. This percentage markets, this boom should result in the strong becoming
rises to 97 percent in first tier cities such as Guangzhou, stronger.” Kitchen appliances including small and built-
Beijing, and Shanghai. Over 82 percent are willing to buy in appliances have replaced white goods to become the
156
